Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Summers: U.S. must balance stimulus, deficits

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- The U.S. government must find a balance between supporting the economic recovery and reducing long-term budget deficits, White House economic advisor Lawrence Summers said Monday.

While the economy has resumed its growth and the possibility of a depression now seems remote, the government should continue its efforts to spur job growth and boost economic output, said Summers, who is director of the White House National Economic Council.

But the challenges posed by the nation's growing budget deficit "cannot be ignored," he added.

"The fiscal policy choices that the United States makes over the next several years will be as consequential as any we have made in a very long time," Summers said in a speech at Johns Hopkins University.

Summers said it was "essential" for the government to run deficits over the last few years as the economy fell into one of the deepest recessions on record.

He said the government's stimulus measures helped revive economic growth, though he acknowledged that many households are still struggling as unemployment hovers near 10%. As a result, he said it is crucial for the government to continue its efforts to support the economy in the near future.

"It would be an act of fiscal shortsightedness to break from the longstanding practice of extending these provisions at a moment when sustained economic recovery is so crucial to our medium-term fiscal prospects," he said.

Still, the government must take steps to ensure that the nation's budget deficit is sustainable over the long term, he added.

The U.S. budget deficit soared to $1.4 trillion last year and is expected to rise past $1.5 trillion this year, according to the Treasury Department.

Summers said much of that deficit will be reduced over the next five years as economic stimulus measures are phased out. He outlined a number of other steps to help bring down the deficit over time, including the Obama Administration's recently enacted health care reform bill.  To top of page

Index Last Change % Change
Dow 15,972.81 -232.16 -1.43%
Nasdaq 4,286.84 -76.30 -1.75%
S&P 500 1,850.24 -29.81 -1.59%
Treasuries 1.80 -0.05 -2.60%
Data as of 9:44am ET
Company Price Change % Change
Mondelez Internation... 37.70 -0.32 -0.84%
Frontier Communicati... 4.68 -0.02 -0.43%
Southwestern Energy ... 9.34 0.50 5.66%
Regions Financial Co... 7.80 -0.10 -1.27%
KeyCorp 10.80 -0.11 -1.01%
Data as of Feb 5
Sponsors

Sections

Wall Street's terrible start to 2016 is about to get worse, with the Dow on track top drop nearly 200 points on Monday morning. Oil prices are also back to $30 a barrel. More

Russia, Mexico and southeast Asia stand to lose from the fall in global currencies while others stand to gain, depending on their trade ties with China. More

Laurie Segall sits down with Foursquare's new CEO Jeff Glueck to discuss the company's latest round of funding at a lower valuation, and their hybrid consumer/enterprise business model. More

Nonprofit JumpStart has launched a new $10M fund that will only invest in women and minority-led startups. The catch: You have to move to Ohio. More

Portland, Oregon, is often described as the last affordable cool city on the West Coast. But as more people move to the city, it's becoming increasingly unaffordable. More